India’s deadly second Covid-19 wave has brought an abrupt halt to its nascent recovery from the pandemic, with the resurgence expected to drag on fuel demand for weeks in a setback for the global oil market.
The combined consumption of diesel and gasoline in April is poised to plunge by as much as 20% from a month earlier due to renewed restrictions, including a week-long lockdown in the capital New Delhi, according to officials from top refiners and fuel retailers. While major oil processors were still buying crude recently, there are signs starting to emerge that refining operations will likely need to be scaled back to adjust for plummeting demand.
“Given the grim situation, it’s likely that the lockdowns could be in place for several weeks or even a couple of months,” according to Senthil Kumaran, the Singapore-based head of South Asia oil at industry consultant FGE. “India’s total key oil products demand will see a significant pullback.”
India has repeatedly shattered records for infections and deaths as the virus sweeps through the nation, stoking fears that the central government may be forced to implement another national lockdown to curb the spread.
Preliminary industry sales figures show a significant impact to fuel demand during the first half of April and expectations are that the situation will only get worse.